Lucky Stores’ Silence on Bid Upsets Suitor : Edelman Group May Make Hostile Offer
Asher B. Edelman, who offered to buy Lucky Stores for $35 a share a week ago and remains without response, said through an associate on Friday that his patience is wearing thin.
The associate, Corey M. Horowitz, would not say whether the group would make a hostile run at Lucky. But he did confirm reports that Edelman has retained Merrill Lynch & Co. as an adviser and lined up potential financing for an acquisition through two unnamed New York commercial banks.
“We’ve been waiting patiently for more than a week for a response from the board,” Horowitz said in an interview. “I can’t say how long our patience will last.” He added that Edelman, who is in Europe, is expected to be back in his Manhattan office on Monday.
Meanwhile, across the continent at Lucky headquarters in Dublin, Calif., the company limited itself to a two-sentence announcement. This said its directors had met Thursday without reaching a decision on how to respond to the Edelman initiative and had requested additional information from management and its outside financial adviser, Goldman, Sachs & Co. The statement said the board will resume deliberations next week, but spokesman Judy Decker declined to be more specific and speculated that the next comment from the company would likely come at the conclusion of that meeting.
$1.79-Billion Bid
Decker also declined to comment on Wall Street reports that Goldman, Sachs is sounding out potential buyers for Lucky’s Gemco chain of membership department stores.
The $35-a-share offer by Edelman, who is thought to own about 3% of Lucky’s 51 million shares outstanding, would amount to about $1.79 billion to buy the company, a diversified retailer with nearly 1,500 stores, primarily in the West and South.
Speculation that the directors may order a restructuring of the company, including unloading ailing Gemco, helped fuel heavy but inconclusive trading in Lucky Stores stock Friday. Lucky again ranked among the 10 most actively traded issues on the New York Stock Exchange, with 1.43 million shares changing hands.
The closing price was $36.125 a share, off 37.5 cents but about $1 higher than before Edelman made his move on Sept. 25. It had added $1.125 a share on Thursday in trading of 1.67 million shares.
Lucky Stores earned $87 million in the fiscal year ended Jan. 31 on $9.4 billion in sales. That dropped from $95 million in earnings on $9.2 billion in sales in 1985 and $105 million net in 1984 on revenue of $8.4 billion.
Supermarkets accounted for two-thirds of company sales last year but yielded only a little more than half of its profits. The department store segment contributed 26% of sales and just 11% of profits. The bright spot has been Lucky’s specialty store business, which includes fabric shops, small department stores and automotive centers. It accounted for just 8% of sales but 36% of profits.
